Does a Balanced Budget Translate into Strong Country ETF Returns?

At least on the surface, the economics of government involvement translates into stimulus spending. There's not a whole lot of cuttin' going on.

In fact, I visited the back page of the most recent edition of The Economist to learn that there isn't a single country that can boast a budget surplus as a percentage of GDP. Whether the situation has come about from a decline in "revenue" or an increase in spending or both, the entire world is experiencing an imbalance.

Granted, as a percentage of total economic output, few countries are in as bad as shape as the United States and Britain. I would have to defer to an astute economist to tell me when, if ever, has the budget imbalance as a % of GDP surpassed -13.2%?

I did, however, identify 3 countries with budget imbalances as a percentage of total economic output that were lower than -3.0%. And I wondered if it is or is not reflected as a sign of hope/health for those countries... a la ETF performance.

Budget Balance % of GDP 2009
				%		YTD (ETFs)
Brazil				-2.0		43.2%
Canada				-2.1		16.7%
Indonesia				-3.0		93.4%
					Note: 93.4% since 1/20

I doubt that a balanced budget alone can account for the success of 2 emerging dynamos like iShares Brazil (EWZ) and Market Vectors Indonesia (IDX). And perhaps it is Canada's recovering currency combined with its vast resources that explains terrific YTD results for iShares MSCI Canada (EWC).

And to be completely fair, we ought not concentrate on calendar year returns. The real question is, how have some of these investments performed versus the U.S. S&P 500 since the bear market's inception in October, 2007? You tell me!